Critical review of literature on corporate governance and the cost of capital: The value creation perspective

Corporate governance encompasses a broad spectrum of mechanisms intended to mitigate agency risk by increasing the monitoring of managements' actions, limiting managers' opportunistic behaviour, and improving the quality of firms' information flows. A torrent of literature explains th...

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Main Authors:	Ramly, Z., Rashid, H.M.A.
Format:	Article
Published:	Academic Journals 2010
Subjects:	H Social Sciences (General)
Online Access:	http://eprints.um.edu.my/12369/

id	um-12369
recordtype	eprints
spelling	um-123692015-01-23T01:17:55Z Critical review of literature on corporate governance and the cost of capital: The value creation perspective Ramly, Z. Rashid, H.M.A. H Social Sciences (General) Corporate governance encompasses a broad spectrum of mechanisms intended to mitigate agency risk by increasing the monitoring of managements' actions, limiting managers' opportunistic behaviour, and improving the quality of firms' information flows. A torrent of literature explains that corporate governance mechanisms are able to enhance a firm's value. A firm's value is commonly measured using either market or accounting performance measures. Alternatively, a value is created when a firm enjoys a reduction in its cost of capital. Theoretically, firms that have robust monitoring devices including strong protection of stakeholders' rights will be able to limit the extent of managerial power abuse and prudently allocate resources. This type of firm should have lower risk and access to cheaper sources of capital than other firms. This paper aimed to provide a critical review of literature on the effect of corporate governance on the cost of capital emphasising on the value creation perspective of corporate governance. Academic Journals 2010 Article PeerReviewed Ramly, Z.; Rashid, H.M.A. (2010) Critical review of literature on corporate governance and the cost of capital: The value creation perspective. African Journal of Business Management <http://eprints.um.edu.my/view/publication/African_Journal_of_Business_Management.html>, 4 (11). pp. 2198-2204. http://eprints.um.edu.my/12369/
repository_type	Digital Repository
institution_category	Local University
institution	University Malaya
building	UM Research Repository
collection	Online Access
topic	H Social Sciences (General)
spellingShingle	H Social Sciences (General) Ramly, Z. Rashid, H.M.A. Critical review of literature on corporate governance and the cost of capital: The value creation perspective
description	Corporate governance encompasses a broad spectrum of mechanisms intended to mitigate agency risk by increasing the monitoring of managements' actions, limiting managers' opportunistic behaviour, and improving the quality of firms' information flows. A torrent of literature explains that corporate governance mechanisms are able to enhance a firm's value. A firm's value is commonly measured using either market or accounting performance measures. Alternatively, a value is created when a firm enjoys a reduction in its cost of capital. Theoretically, firms that have robust monitoring devices including strong protection of stakeholders' rights will be able to limit the extent of managerial power abuse and prudently allocate resources. This type of firm should have lower risk and access to cheaper sources of capital than other firms. This paper aimed to provide a critical review of literature on the effect of corporate governance on the cost of capital emphasising on the value creation perspective of corporate governance.
format	Article
author	Ramly, Z. Rashid, H.M.A.
author_facet	Ramly, Z. Rashid, H.M.A.
author_sort	Ramly, Z.
title	Critical review of literature on corporate governance and the cost of capital: The value creation perspective
title_short	Critical review of literature on corporate governance and the cost of capital: The value creation perspective
title_full	Critical review of literature on corporate governance and the cost of capital: The value creation perspective
title_fullStr	Critical review of literature on corporate governance and the cost of capital: The value creation perspective
title_full_unstemmed	Critical review of literature on corporate governance and the cost of capital: The value creation perspective
title_sort	critical review of literature on corporate governance and the cost of capital: the value creation perspective
publisher	Academic Journals
publishDate	2010
url	http://eprints.um.edu.my/12369/
first_indexed	2018-09-06T06:05:48Z
last_indexed	2018-09-06T06:05:48Z
_version_	1610837077370339328

Critical review of literature on corporate governance and the cost of capital: The value creation perspective

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